Correlation Between Europacific Growth and Fidelity Advisor

Can any of the company-specific risk be diversified away by investing in both Europacific Growth and Fidelity Advisor at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Europacific Growth and Fidelity Advisor into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Europacific Growth Fund and Fidelity Advisor Overseas, you can compare the effects of market volatilities on Europacific Growth and Fidelity Advisor and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Europacific Growth with a short position of Fidelity Advisor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Europacific Growth and Fidelity Advisor.

Diversification Opportunities for Europacific Growth and Fidelity Advisor

0.92

Correlation Coefficient

Europacific Growth  Fidelity Advisor

Almost no diversification

The 3 months correlation between Europacific and Fidelity is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Europacific Growth Fund and Fidelity Advisor Overseas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Overseas and Europacific Growth is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Europacific Growth Fund are associated (or correlated) with Fidelity Advisor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Advisor Overseas has no effect on the direction of Europacific Growth i.e., Europacific Growth and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Europacific Growth and Fidelity Advisor

Assuming the 90 days horizon Europacific Growth is expected to generate 3.43 times less return on investment than Fidelity Advisor. In addition to that, Europacific Growth is 1.01 times more volatile than Fidelity Advisor Overseas. It trades about 0.01 of its total potential returns per unit of risk. Fidelity Advisor Overseas is currently generating about 0.03 per unit of volatility. If you would invest  3,059  in Fidelity Advisor Overseas on October 7, 2024 and sell it today you would earn a total of  153.00  from holding Fidelity Advisor Overseas or generate 5.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Europacific Growth Fund  vs.  Fidelity Advisor Overseas

Europacific Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Europacific Growth Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Fidelity Advisor Overseas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Advisor Overseas has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Europacific Growth and Fidelity Advisor

The main advantage of trading using opposite Europacific Growth and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Europacific Growth position performs unexpectedly, Fidelity Advisor can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Fidelity Advisor will offset losses from the drop in Fidelity Advisor's long position.

The idea behind Europacific Growth Fund and Fidelity Advisor Overseas pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .